Four major automakers will remain neutral in a legal standoff over the Trump administration’s plan to substantially weaken federal fuel economy standards developed under the Obama White House, according to early media reports.

Ford, Volkswagen, Honda and BMW plan to file a joint motion today in a Washington, DC., appeals court that will give the companies a say on final auto rules should courts reject the Trump administration’s proposed change, but that will not take a position on the proposed change itself, according to reports by Bloomberg and Reuters.

In March, the Trump administration rolled out a long-awaited rule change that would require automakers to improve fuel economy standards by only around 1.5% per year. That would be much lower than the roughly 5% per year improvement that a rule issued by the Obama administration in 2009 and updated in 2012 has required. 

The state of California has challenged the Trump administration’s efforts to weaken fuel economy standards. More than twenty states have backed a lawsuit that it filed in May against the planned rollback of fuel economy standards. California has vowed to continue enforcing the stricter Obama-era rule, even if that risks cleaving the US auto industry into two different markets.

The Alliance for Automotive Innovation, an industry group representing most US automakers including General Motors
GM
, Fiat Chrysler and Toyota, has backed the Trump administration over California. But Ford, Volkswagen, Honda and BMW are part of a breakaway group. In July 2019 they announced a voluntary agreement with California that would bind them to standards that are slightly weaker than the Obama-era ones yet still substantially tougher than the Trump administration’s proposed ones. 

The move infuriated the President, according to reports, and spurred an antitrust probe against the automakers, although it was later dropped. 

All US automakers fear what could happen if courts allow both the Trump administration’s relaxed standards and California’s tougher standards to stand. Such an outcome would effectively cleave the US auto industry into two separate markets, forcing carmakers to design two separate lines of vehicles. Even if an automaker were to voluntarily adhere to the tougher fuel economy standards in states that enforced only the more relaxed version, it would risk getting beaten on cost by rivals making less efficient and cheaper cars.

Experts who have followed the legal tug-of-war over whose standards should prevail were not surprised by today’s news that the four automakers had chosen to remain neutral. “I think most people watching these cases expected the companies to either support the challengers [California, the other states, and energy companies]…or to intervene the way they have neutrally to protect their interests. I don’t think anyone was expecting these four companies to side with the Trump administration,” said Caitlin McCoy, a staff attorney at Harvard Law School’s Environmental Law and Energy Program.

“That said, I assume that California, the other states and energy companies challenging these rules hoped that these four companies would side with them rather than remaining neutral because it would send a message to the court about the feasibility of complying with more ambitious standards and the willingness of the industry to be subject to higher standards. Perhaps the companies feel that their agreement with California sends that message and so they don’t need to side with the challengers in the case to demonstrate that,” said McCoy.

Ford did not immediately respond to a comment while other automakers could not immediately be reached.



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